UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
________________
Form
10-K/A
Amendment
No. 1
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the fiscal year ended December 31, 2006
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or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the transition period from
to
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Commission
File Number 0-28252
________________
BROADVISION,
INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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94-3184303
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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1600
Seaport Blvd., 5th
Fl., North Bldg., Redwood City, CA 94063
(Address
of principal executive offices, including zip code)
(650) 331-1000
(Registrant's
telephone number, including area code)
________________
Securities
Registered Pursuant to Section 12(g) of the Act:
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Common
Stock, $0.0001 par value
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes ¨
No ý
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨
No ý
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ý
No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
(Check one):
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Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer ý
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ¨
No
ý
As
of
June 30, 2006, based on the last sale price on the Pink Sheets, 28,644,176
shares of the registrant's common stock, having an aggregate market value of
approximately $14,322,088, were held by non-affiliates. For purposes of the
above statement only, all directors and executive officers of the registrant
are
assumed to be affiliates.
On
February 28, 2007, the registrant had 106,566,567 shares of common stock
outstanding.
BROADVISION,
INC.
ANNUAL
REPORT ON FORM 10-K/A
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2006
Explanatory
Note to Form 10-K Amendment No. 1
This
Amendment No. 1 (this "Amendment") to the Annual Report on Form 10-K
for the fiscal year ended December 31, 2006 (the "Form 10-K") of BroadVision,
Inc. is being filed:
(a)
to
amend Item 9A of Part II of the Form 10-K to add an explicit statement
regarding changes to internal controls in the fourth quarter of 2006 and to
provide information relating to the identified material weakness, including
relating to the identification of the weakness and the expected cost of and
timing for remediating the weakness; and
(b)
to
amend the Exhibit Index to remove certain items.
No
other
changes have been made to Items 9A and the Exhibit Index.
PART
II
Item
9A. Controls
and Procedures
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms and that such information is accumulated and communicated
to our management, including the individual who serves as our Chief Executive
Officer and interim Chief Financial Officer, as appropriate, to allow for timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls
and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
is required to apply its judgment in evaluating the cost-benefit relationship
of
possible controls and procedures. Our disclosure controls and procedures were
designed to provide reasonable assurance that the controls and procedures would
meet their objectives.
As
required by Rules 15(e) and 15d-15(e) under the Exchange Act, we carried out
an
evaluation, under the supervision and with the participation of our management,
including the individual who serves as both our Chief Executive Officer and
our
interim Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period
covered by this report. Based on the foregoing, our Chief Executive Officer
and
interim Chief Financial Officer concluded that our disclosure controls and
procedures were not effective at the reasonable assurance level. This conclusion
was based on the identification of one material weakness in internal control
over financial reporting as of December 31, 2006.
~1~
As
we
previously reported, our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2005, and this
assessment identified one material weakness. Specifically, as of December 31,
2005, we did not have a sufficient number of experienced personnel in our
accounting and finance organization to facilitate an efficient financial
statement close process and permit the preparation of our financial statements
in accordance with Generally Accepted Accounting Principles (GAAP). For example,
there were a significant number of adjustments to our financial statements
during the course of the 2005 audit, at least one of which was individually
material and required us to restate several prior quarters. Our personnel also
lacked certain required skills and competencies to oversee the accounting
operations and perform certain important control functions, such as the review,
periodic inspection and investigation of transactions of our foreign locations.
We consider this to be a deficiency that was also a material weakness in the
operation of entity-level controls.
In
2006
we hired several new full-time employees, and we believe that as of December
31,
2006 we have retained a sufficient number of experienced personnel in our
accounting and finance organization to enable us to address the material
weakness that existed as of December 31, 2005. These new hires have augmented
the capabilities of our organization, but in many cases they replaced employees
or part-time contactors who had left the Company for various reasons. This
turnover has caused a reduction in our institutional knowledge regarding
historical events. While we believe that the recent additions to our accounting
and finance organization continue to gain familiarity with the complex issues
relating mainly to our historical operations, as of December 31, 2006 the full
organization had not yet been in place for a sufficient amount of time to allow
us to conclude that no material weakness existed as of December 31, 2006.
Accordingly, when our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2006, this assessment
identified one material weakness. If we are not successful in retaining
experienced personnel in our accounting and finance organization in order to
sufficiently address the reduction in institutional knowledge referenced above,
there is more than a remote likelihood that our quarterly or annual financial
statements could be materially misstated, which could require a
restatement.
We
anticipate that we will be able to remediate the material weakness that existed
as of December 31, 2006 by the end of 2007, but we cannot provide assurance
that
we will be successful in doing so. Maintaining sufficient expertise and
historical institutional knowledge in our accounting and finance organization
is
dependent upon retaining existing employees and filling any open positions
with
experienced personnel in a timely fashion. The market for skilled accounting
and
finance personnel is competitive and we may have continued difficulty in
retaining our staff because (1) in the region in which we compete there are
many established companies that can offer more lucrative compensation packages
and (2) some professionals are reluctant to deal with our complex
accounting issues relating to our historical operations. One Senior Accountant
who joined the Company in the third quarter of 2006 left in January 2007. Our
inability to staff the department with competent personnel with sufficient
training will affect our internal controls over financial reporting to the
extent that we may not be able to prevent or detect material misstatements.
Remediating the material weakness that existed as of December 31, 2006 will
require us to incur the recruiting and compensation costs necessary to attract
and retain an adequate staff of qualified accounting and finance personnel.
These costs may be higher than normal due to the importance to us of remediating
this weakness, but we do not anticipate that any incremental costs associated
with this remediation effort will be material.
Changes
in Internal Control Over Financial Reporting
There
has
been no change in our internal control over financial reporting during the
quarter ended December 31, 2006 that has materially affected, or that is
reasonably likely to materially affect, our internal control over financial
reporting.
Limitations
on the Effectiveness of Controls
Our
management, including our Chief Executive Officer and interim Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error and fraud. A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and
that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of
two
or more people, or by management override of the controls. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design
will
succeed in achieving its stated goals under all potential future conditions;
over time, controls may become inadequate because of changes in conditions,
or
the degree of compliance with the policies or procedures may deteriorate.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected. Our
disclosure controls and procedures are designed to provide reasonable assurance
of achieving their objectives, and we are in the process of remediating the
material weakness that existed at December 31, 2006.
~2~
Pursuant
to the requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
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BROADVISION, INC.
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Date:
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May
15, 2007
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By:
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/s/
Pehong Chen
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Pehong
Chen
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Chairman
of the Board, President, Chief Executive Officer and Interim Chief
Financial Officer
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Signature
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Title
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Date
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/s/ Pehong
Chen
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May 15,
2007
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Pehong
Chen
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Chairman
of the Board, President, Chief Executive Officer, and (Principal
Executive
Officer)
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/s/ Pehong
Chen
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Pehong
Chen
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Interim
Chief Financial Officer
(Principal
Accounting Officer)
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May 15,
2007
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/s/ Francois
Stieger
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May 15,
2007
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Francois
Stieger
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Director
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/s/ James
D. Dixon*
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May 15,
2007
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James
D. Dixon
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Director
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/s/
Robert Lee*
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May 15,
2007
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Robert
Lee
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Director
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*By
Pehong Chen, as Attorney-In-Fact
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/s/
Pehong Chen
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May 15,
2007
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Pehong
Chen
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~3~
EXHIBIT
INDEX TO FORM 10-K
BROADVISION, INC.
ANNUAL REPORT ON FORM 10-K DECEMBER 31, 2006
INDEX
TO EXHIBITS
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Exhibit
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Description
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3.1(1)
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Amended
and Restated Certificate of Incorporation.
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3.2(4)
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Certificate
of Amendment of Certificate of Incorporation.
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3.3(12)
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Amended
and Restated Bylaws.
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3.4(16)
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Certificate
of Amendment of Certificate of Incorporation.
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4.1(1)
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References
are hereby made to Exhibits 3.1 to 3.4.
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4.2(9)
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Registration
Rights Agreement dated November 10, 2004 among the Company and certain
investors listed on Exhibit A thereto.
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4.3(13)
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Registration
Rights Agreement dated March 8, 2006, between the Company and Honu
Holdings LLC.
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10.1(6)(a)
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BroadVision,
Inc. Equity Incentive Plan as amended through May 1, 2002 (the "Equity
Incentive Plan").
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10.2(1)(a)
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Form
of Incentive Stock Option Agreement under the Equity Incentive Plan.
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10.3(15)(a)
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BroadVision,
Inc. 2006 Equity Incentive Plan.
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10.4(6)(a)
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1996
Employee Stock Purchase Plan as amended May 1, 2002 (the "Employee
Stock
Purchase Plan").
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10.5(1)(a)
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Employee
Stock Purchase Plan Offering (Initial Offering).
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10.6(1)(a)
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Employee
Stock Purchase Plan Offering (Subsequent Offering).
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10.7(2)
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Lease
dated February 5, 1997 between the Company and Martin/Campus Associates,
L.P.
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10.8(3)(a)
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BroadVision,
Inc. 2000 Non-Officer Equity Incentive Plan.
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10.9(5)
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Form
of Indemnity Agreement between the Company and each of its directors
and
executive officers.
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10.10(7)
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Assignment
and Assumption of Master Lease, Partial Termination of Master Lease
and
Assignment and Assumption of Subleases, dated July 7, 2004, between
the
Company and Pacific Shores Investors,
LLC.
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10.11(7)
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Warrant
to Purchase up to 700,000 share of common stock, dated July 7, 2004,
issued to Pacific Shores Investors, LLC.
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10.12(7)
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Triple
Net Space Lease, dated as of July 7, 2004, between the Company and
Pacific
Shores Investors, LLC.
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10.13(8)
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Securities
Purchase Agreement dated as of November 10, 2004.
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10.14(10)
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Settlement
Agreement dated for reference purposes February 4, 2005, by and between
the Company and Metropolitan Life Insurance Company.
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~4~
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10.15(11)
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Debt
Conversion Agreement dated as of December 20, 2005, between the Company
and Honu Holdings, LLC.
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10.16(14)(a)
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Form
of Restricted Stock Bonus Agreement under the Equity Incentive
Plan.
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10.17(17)
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Sublease
Agreement, dated December 21, 2006, between the Company and Dexterra,
Inc.
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10.18(18)(a)
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BroadVision,
Inc. Severance Benefit Plan.
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21.1(13)
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Subsidiaries
of the Company.
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23.1
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Consent
of BDO Seidman, LLP.
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23.2
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Consent
of Stonefield Josephson, Inc.
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23.3
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Consent
of Odenberg, Ullakko, Muranishi & Co. LLP, an independent registered
public accounting firm
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24.1
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Power
of Attorney, pursuant to which amendments to this Annual Report on
Form 10-K may be filed, is included on the signature page
hereto.
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31.1
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Certification
of the Chief Executive Officer and Chief Financial Officer of the
Company.
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32.1
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Certification
of the Chief Executive Officer and Chief Financial Officer of the
Company
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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(1)
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Incorporated
by reference to the Company's Registration Statement on Form S-1
filed on
April 19, 1996 as amended by Amendment No. 1 filed on
May 9, 1996, Amendment No. 2 filed on May 29, 1996 and
Amendment No. 3 filed on June 17, 1996.
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(2)
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Incorporated
by reference to the Company's Form 10-K for the fiscal year ended
December 31, 1996 filed on March 31, 1997.
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(3)
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Incorporated
by reference to the Company's Registration Statement on Form S-8
filed on
October 15, 2003.
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(4)
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Incorporated
by reference to the Company's Proxy Statement filed on May 14,
2002.
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(5)
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Incorporated
by reference to the Company's Form 10-Q for the quarter ended
September 30, 2002 filed on November 14,
2002.
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(6)
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Incorporated
by reference to the Company's Registration Statement on Form S-8
filed on
August 1, 2002.
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(7)
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Incorporated
by reference to the Company's Current Report on Form 8-K filed on
August 9, 2004.
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(8)
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Incorporated
by reference to the Company's Current Report on Form 8-K filed on
November 10, 2004.
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(9)
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Incorporated
by reference to the Company's Current Report on Form 8-K filed on
February 1, 2005.
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(10)
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Incorporated
by reference to the Company's Current Report on Form 8-K filed on
February 16, 2005.
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(11)
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Incorporated
by reference to the Company's Current Report on Form 8-K filed on
December 22, 2005.
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(12)
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Incorporated
by reference to the Company's Form 10-K for the fiscal year ended
December 31, 2005 filed on June 9, 2006.
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(13)
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Incorporated
by reference to the Company Annual Report on Form 10-K for the fiscal
year ended December 31, 2005, filed on June 9,
2006.
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(14)
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Incorporated
by reference to the Company's Form 10-Q for the quarter ended March
31, 2006 filed on August 10, 2006.
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(15)
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Incorporated
by reference to the Company's Registration Statement on Form S-8
filed on
November 6, 2006.
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(16)
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Incorporated
by reference to the Company Annual Report on Form 10-K for the fiscal
year ended December 31, 2006, filed on March 27,
2007.
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(17)
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Incorporated
by reference to the Company's Current Report on Form 8-K filed on
January 10, 2007.
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(18)
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Incorporated
by reference to the Company's Current Report on Form 8-K filed on
March 30, 2007.
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(a)
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Represents
a management contract or compensatory plan or
arrangement.
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~5~
EXHIBIT
INDEX TO
AMENDMENT NO. 1
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Exhibit
Number
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Exhibit Description
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Certification
of the Chief Executive Officer and Chief Financial Officer of the
Company, as required by Rule 13a-14(a) or Rule
15d-14(a).
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~6~